The interest rate on loans will increase due to the National Bank’s decision to record a record increase in the discount rate to 25%.
New loans under the “5-7-9” program will be issued at a rate of up to 20%, announced on Friday, July 29, Prime Minister Denys Shmihal.
“Among the government decisions we are making now to resume economic activity are regulatory changes to targeted lending programs. After the NBU raised the discount rate, such programs were slowed down. This is what it says of business. Therefore, the government will make changes today that will remove the obstacles that have arisen under the 5-7-9 program, financial leasing and the program of state portfolio guarantees,” he said.
Now, until the end of martial law, banks can raise the rate up to 20% for new loans.
“The emphasis is also on investment loans,” said Shmihal.
According to him, the main purpose of the rate increase is to activate soft lending programs for businesses.
As you know, on June 2, the National Bank of Ukraine raised the discount rate by 1,500 basis points to 25% per annum from the current 10%, which is the highest since 2015. At the same time, the regulator basically said that no more this will increase the discount rate.
The discount rate equals the economic value of money. At this rate, the NBU provides funds to commercial banks, which, in turn, lend to individuals and legal entities. Thus, the discount rate affects the value of credit resources.
An increase in the discount rate indicates an increase in inflation and a fall in economic growth in the country.
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Source: korrespondent
I am Dylan Hudson, a dedicated and experienced journalist in the news industry. I have been working for Buna Times, as an author since 2018. My expertise lies in covering sports sections of the website and providing readers with reliable information on current sporting events.